Raid on Venezuela

Operation Absolute Resolve

On 3^rd January 2026, USA launched a military strike on Venezuela, codenamed Operation Absolute Resolve. The raid officially aims to counter narco-terrorism, and was explicitly linked to target Venezuela’s oil sector. Specifically, USA’s goal was to develop the vast Venezuelan oil reserves with U.S. energy companies.

International & Domestic Reactions

Russia, China and Iran and many Latin American governments denounced the operation, citing violation of Venezuelan sovereignty and condemning it as “armed aggression”. Most European and North American allies expressed support for the operation, though many are calling for de-escalation, and some are scrutinizing the legality of it.

Domestically, early polls in USA are showing a split opinion of the military action taken; around 33% split in approved, not sure and not approved.

Oil Sector Effects After the Raid

Venezuelan Crude Oil Profile

Merey crude, the benchmark grade for Venezuela’s heavy sour exports. Globally, Venezuela holds the world’s largest proven oil reserve. Before the raid, despite being a Latin American country, a majority of its crude is exported to China, due to sanctions by USA. These discounted Merey and other grades of crude are often export via shadow fleets to evade sanctions. After the raid on Venezuela and USA’s control over the country’s crude export, Venezuelan oil will face redirection towards U.S. markets.

Fuel Oil

With the seizure of oil shipments after the raid, supply disruption fears sparked in the market. In fuel oil, FO Cross-Arb Q3 rallied around $4 through weeks after the raid. Chinese refiners that previously imported discounted bitumen mix from Venezuela faced a squeeze on cheap heavy feedstock and switching to more expensive alternatives.

Figure 1. FO Cross-Arb Q3 Source: Curveseries

Merey Crude Spot Prices in Shandong

Merey crude spot prices in Shandong were on a bearish trend for since the year 2023. Previous blockades of the Venezuelan oil exports were relaxed during the Biden Administration, allowing for limited operations for companies like Chevron and others. However, after the raid on Venezuela, supply of Merey crude into China tightened considerably, reflected through its spot price in Shandong rallying by around 100 CNY/Ton.

Figure 2. Merey Crude Spot Prices in Shandong. Sources: Mysteel Oilchem

Brent/Dubai Spread

On 28^th December 2025, Iranian anti-government protests erupted, and overlaps with USA’s raid on Venezuela.

Figure 3. Brent Prices Q3. Sources: Curveseries

Figure 4. Dubai Q3 Prices. Sources: Curveseries

In tandem, the political turmoil in Venezuela and Iran caused significant uncertainty for crude oil supply globally. Crude prices begun a bullish trend, with Brent Q3 and Dubai Q3 prices rises around 2.5 USD/BBL and 2.2 USD/BBL respectively. Brent prices outpaced Dubai’s due to the raid on Venezuela. With USA’s stance to develop oil production in Venezuela, Dubai crude faces additional competition in prices. This flattens Dubai’s price growth, leading to Brent/Dubai Q3’s prices to rally, no longer setting seasonal lows as compared to most of 2025 prices.

Figure 5. Brent/Dubai Q3. Sources: Curveseries

Conclusion

Long term effects on USA’s control of Venezuelan oil still remain to be seen. Market experts are not expecting any long-term effects to persist and likely prices will correct as time passes.